A credit bureau is an agency that collects data relating to the credit information of individuals and provides this data to a consumer reporting agency.They help lending institutions make better choices when they receive credit requests from individuals, to prevent reneging on the agreements made or defaults of loans.While there is a high requirement for these services, there are three major credit bureaus in the country: EQUIFAX, TRANSUNION, and EXPERIAN.In this article we will see What Credit Bureau Does Divvy Use?
Credit Bureau Used By Divvy:
The credit bureau used by Divvy in its role of business finance management is called EXPERIAN.
It’s a globally recognized credit reporting agency that helps businesses guard against identity theft and provides business credit assistance as well.
Experian uses the FAIR ISAACS COMPANY (FICO) algorithm model to calculate the credit scores of each account.
Before a credit report can be gotten, Experian requires certain information for the process such as:
- Personal data including name, address, birth date, and employer
- Summary of loans
- Public records
- Previous credit inquiries and applications
Experian provides an in-depth look at the credit history of an individual, which determines the creditworthiness of such individual, while this information is sold to consumers the bureau is dictated by law to provide consumers with a free credit report in a year.
It provides monthly data for each account which includes minimum payment due, the payment amount, and the balance left, giving lenders adequate information about the individual’s debt management.
An Experian credit report includes
- Personal information
- Employment
- Inquiries
- Accounts (credit cards, mortgages, and loans)
EXPERIAN offers both free and paid credit services, its free credit monitoring provides the basic service of reporting any changes to the EXPERIAN report of a person while the paid IDENTITY WORKS is the best for families since it offers a wider range of features at a charge in varying packages.
What IS Divvy?
Divvy is a platform developed to manage the spending and expenses of businesses.
While divvy offers funding options for businesses its primary goal however is to help businesses manage their finances through integrated accounting systems and controlled spending.
This platform issues a charge card to promote visibility and also helps a business owner to control the business spending by setting a budget.
The business also develops better credit through the use of DIVVY because it reports the positive payment to the SMALL BUSINESS FINANCE EXCHANGE (SBFE), unlike the majority of credit companies who only report missed payments.
While the payment history reports might not seem like much, it helps businesses to build a good credit score, which makes it easier to access loans and funds.
Divvy can be labeled as a three-tier service provider because it performs three primary functions which are:
Business credit
It makes access to funding easy for businesses and their owners, with a credit line of up to $15M, there is a DIVVY program for everyone. There is an opportunity to apply for a credit line increase as the business scales up.
Spend management
Provides budget options for businesses to control their spending, sets spending limit which is directly linked to employee cards, visibility of all transactions made, sending and requesting funds made easy as well.
Expense management
Produces an expense report at a faster pace which saves a lot of time and effort, tracking of all expenses, retains the monthly information of all transactions made monthly with its easy to use expense management software.
DIVVY performs a soft inquiry on businesses whenever a credit application is submitted to determine the best credit limit for a business without affecting their credit score.
Why Are Credit Bureaus Needed?
Credit bureaus gather data from individual credit history which includes transaction history, credit products account either opened or closed. The bureau gathers this information against an algorithm and creates a measurement of the creditworthiness of an individual.
The numerical measurement value obtained from this system is called a credit score, which ranges from 300 to 850 depending on the model used, while the bureau works with credit information they are not the same as a credit rating agency.
The services provided are important for:
Lending institutions
Banks are an example and they make use of this information to determine the creditworthiness of a customer before the approval of loans. Customers who have good credit quality are given loans with incentives such as a lower interest rate, while those who don’t are either denied or given a higher interest rate to reduce the risk of default.
Credit unions
Agencies who are in the business of serving the people and not profit. They take deposits from their members and also borrow them money. Unlike a local bank, they are owned and controlled by its members. They use the data gathered by credit bureaus to make decisions that affect the finance of their agency and its members.
Individuals
Aside from lending institutions, credit bureaus also sell the credit information to individuals who are interested in knowing their credit history.
Conclusion
Financial technology is an ever-growing branch that has helped in the automation of financial services, DIVVY is an example of a software platform dedicated to providing solution services to businesses.
